Nigeria will end its electricity subsidy in 2027, according to the Minister of Power, Joseph Olasunkanmi Tegbe. The removal will be phased in gradually, and the government has no immediate plans to raise tariffs as part of the transition.
Tegbe announced the timeline during a recent disclosure on the government’s power sector reform agenda. He said the subsidy removal is necessary to make the sector financially sustainable and to draw more private investment into electricity generation and distribution.
Electricity subsidies in Nigeria cover the gap between what it costs to generate and deliver power and what consumers pay through regulated tariffs. Ending the subsidy means prices will move closer to the actual cost of supply, depending on future decisions by regulators.
The minister cited accumulated debts, funding shortfalls, and the need to attract private capital as the main reasons for the move. He described the planned removal as part of wider reforms aimed at restructuring the country’s power market.
“The government is not planning an immediate increase in electricity tariffs as part of the transition,” Tegbe said. The phase-out will be gradual, he added, with the government’s focus on building a market that can operate sustainably while protecting consumers during the shift.
Nigeria’s power sector has struggled for years with inadequate infrastructure, gas supply constraints, limited generation capacity, and financial difficulties among operators. The sector has also piled up debts across the value chain, from generation companies to distribution firms, as tariffs have remained below cost-reflective levels.
The 2027 subsidy removal is not the first attempt at tariff reform. The Federal Government has previously adjusted tariffs for certain consumer categories, including a significant increase for Band A customers, who receive a minimum of 20 hours of supply per day. Those changes were part of an earlier push to reduce the burden on public finances and improve service delivery.
The new timeline extends that policy further. By 2027, the government intends to eliminate the subsidy entirely, removing the gap that currently keeps consumer prices below the cost of supply.
Tegbe did not specify how the transition would affect different consumer classes or whether protections would remain for low-income households. He said only that the government aims to protect consumers during the transition.
The announcement comes as Nigeria continues to grapple with power generation that frequently falls short of demand. The national grid has experienced repeated collapses, and many businesses and households rely on diesel generators as a backup, adding to the cost of doing business in the country.
Private investment in the sector has been slow to materialise, partly because of the financial uncertainty created by the subsidy regime. Investors have been reluctant to commit capital to generation and distribution when tariffs do not cover costs and payments are not guaranteed.
The move to end subsidies by 2027 is intended to change that calculation. If prices move closer to cost-reflective levels, the argument goes, revenue will become more predictable and the sector will become more attractive to private capital.
Tegbe said the government’s goal is to create a power market that can operate without ongoing public support. The 2027 deadline gives the sector time to adjust, he said, and signals a firm end date for a subsidy that has placed a growing strain on public finances.
There is no word yet on what the removal will mean for the average electricity bill. The minister said only that the transition would be gradual and that the government was not planning an immediate tariff increase.
The Federal Government has spent billions of naira on electricity subsidies in recent years, with the cost rising as the naira has weakened and the gap between cost-reflective tariffs and consumer prices has widened.
Tegbe’s announcement sets a clear marker: by 2027, Nigeria’s power sector will be expected to stand on its own.
According to Pulse.ng.
